Hey, this is Steve Eisman and welcome to

another episode of the real Eisman

playbook. So today we are going to talk

about sustainable energy and mobility

and you know a couple weeks ago we had

Stacy Rasgen on from Bernstein and we

were joking that I was joking with him

that his group semiconductors is the

center of the universe. our guest today,

Ben Kell of Baird. I don't know if it's

the center of the universe, but it's

certainly adjacent.

And the reason is that if this AI story

is going to come to fruition, the

binding constraint clearly is both the

construction of data centers and the

power that the data centers require. And

Ben covers a real hodgepodge of

companies that deal with those issues.

And he also covers electronic vehicles.

and we're going to explore those

companies and we're going to do it in

depth and then afterwards I'll come back

with some lessons learned.

Hi, this is Steve Eisman and this is

another episode of the real Eisman

playbook. So if the center of the

universe is semiconductors and Nvidia

and maybe hyperscalers, although that's

debatable right now, the next circle

would be what I would call a hodgepodge

of companies that provide alternative

energy energy to data centers that also

do electronic vehicles. So call it

center of the universe once removed. And

today to explore this really interesting

group, we have Ben Callow who is the

sustainable energy and mobility analyst

at Bair.

>> Yes, thanks for having me on.

>> Yeah, it's this is going to be very

interesting. So before we dig down into

like the themes and companies because

you really cover a hodgepodge of

different companies.

>> I mean you cover Tesla, you cover

Genova. The two really don't have much

to do with one another other than that

you cover them.

>> Yes. If we were at a cocktail party and

I and I we we just met and you told me

what you did and I I said to you,

>> you know, I invest I I have a general

idea of things.

>> Could you give me like a twominut

summation about what's going on in your

world? Because it seems to me from what

I read

>> so much is going on in your world. Yeah,

>> I would say we cover companies that are

key to electrifying the grid uh and uh

companies that uh will use that

electricity whether it's u uh Tesla with

electric vehicles or it's uh you know

electricity to power data centers um uh

but more and more we're seeing uh more

strains on the grid uh and so any

companies helping to solve that problem

uh not just in the United States but

globally as well.

>> So there's a grid problem largely

because of data centers but also because

electricity was growing before then too.

Yeah, I I think a lot of times we we

think it's only data centers. That's the

one because it's so chunky uh load

sources coming on uh that gets the most

of attention and it's become a you know

a a political boogeyman in some states

uh it gets a lot of headlines but uh

onshoring manufacturing in the United

States uh aging infrastructure so

shutting down coal plants not just

because of environmental reasons or not

because of environmental reasons because

um uh they're old 75 years uh plants

that need to be shut down inefficient.

Uh so you combine that with onshoring

and then electrification of uh homes uh

vehicles that's more of a Europe type

phenomena but also impacting the US and

globally as well. All that put together

uh and we're in a tough spot with our

electricity grid.

>> We're going to come to that because

that's a controversial topic. But before

we even get to that, let's just try to

scale it.

>> Yeah.

>> Would it be more or less accurate to say

that the electronic grid in the United

States is growing roughly 3% per year?

Or is it more or is it less?

>> It's more. The range you could drive a

truck through of what people say that we

need uh in terms of uh

>> because it's not like the data is so

great.

>> No, the range of estimates could be 100

gawatts of new capacity needed by 2035.

Okay.

>> Which would you know uh up to 350. At

350, you're more than doubling all the

electricity generation in the United

States.

>> How much electricity generation is there

today? So today you know there there is

about just over 150 gawatt. Yes.

>> Okay.

>> Now you measure that in terowatt hours

of production because you have all

different sorts of uh you know capacity

factors where you know wind at the

lowest it only produces you know 20%

capacity of the time. Uh and then

nuclear at the highest where it's

producing 99% of the time.

>> Producing 99% of the time. Okay. And

what about gas turbines? Aren't they

producing most of the time?

>> Gas turbines you run in the high 80

percentage combined cycle turbines. How

much gigawatts are are we growing every

single year? More or less?

>> Over the next five years, we'll be

growing at like a 30 gawatt type clip

>> per year.

>> Per year? Yes.

>> 30 gigawatts per year?

>> Yes.

>> So like scale that for me like how much

how much electricity does New York City

use in a year?

>> So you could think about like a one

megawatt which one megawatt could turn

into a,000 gawatts, right? But one

megawatt could produce enough

electricity for roughly a thousand

homes.

>> A thousand homes. Yeah.

>> Okay.

>> So you're talking 30 gawatts per year.

Yeah.

>> Which that's an enormous number. It's

not easy. It's not easy to produce

enough electricity to create 30 gawatts

per year.

>> Yes. And this is only uh this is like

base load demand of electricity too.

>> What does that mean base load? So on you

know 247 basically like the nuclear side

or you know on the renewable side

geothermal is the best source of base

load in addition to nuclear or hydro and

that's really what has to be powered by

data centers and so firm power uh that's

how much capacity. So you actually have

incremental capacity needed beyond that.

Oh, so in other words, there's the

amount that that's basically used

normally. Yes. That's base load. Yes.

And then if it's a really really really

hot summer or a really really cold

winter

and you have to have more than base load

because otherwise people freeze to death

or or cook.

>> Yeah. What we're seeing here in New

York, just anecdotally, my office is

down the street uh here in Midtown and

our building will have uh curtailment

days and this is oldfashioned way of

freeing up the grid. So on a hot hot day

like this uh they might send out a note

to all the tenants no air conditioning

between 12 and 4:00 at night and it's

the frequency of those events are

becoming uh more

>> and it just shows the kind of stress on

the grid and this is before data centers

because really they get all the

attention but there haven't really been

gigawatt data centers that have be built

yet.

>> But let's talk about that for a sec. I'm

on like every single substack you could

possibly imagine. Okay. And this is not

rational argumentation. You'll have one

person, I won't name who that person is,

who basically says there are no data

centers being developed. It's all

>> Yeah.

>> And then you have other people who say

here are all the data centers that are

being built.

>> And for someone like me where this is

not my area of expertise, I'm like, I

don't know what to make with that

because, you know, you're talking about

two people who basically hate each

other's guts. Yes.

>> Lit. Literally. So from where you sit

because even the people who are very

bullish on AI yeah

>> even they will admit that if if

>> data centers don't get built at the pace

that needed to build them

>> AI has to slow down. So, you know, I'm

thinking about Dan Ies, for example, who

has been on our show. Great guy.

>> He's very bullish. God bless him. But

even he admits that the binding

constraint of his thesis is power. You

cover basically all the people who

supply the energy to the data centers.

You don't cover the people who build the

data centers, but but those data centers

don't function without your companies.

So, what are you hearing from your

companies about the pace of the buildout

of data centers?

>> Sure. Uh the pace is uh is

[clears throat] constrained by labor and

energy. Uh projects are going forward.

Uh we we'll point to one uh project in

Wyoming. It's a Google project. Um uh

reportedly uh it had Crusoe as uh the

developer. Google fired Crusoe.

>> Cruso was the construction company

>> construction company and it created a a

vacuum of of uh information in the

market when that happened because Crusoe

was walked away. people thought the

project stopped. They thought the

governor stopped the project and people

parts of the development uh uh chain

have come out and said the project's

going forward. Um I think that it's

complicated because there are so many

different counterparties in these data

centers that you have cross-selling

across all all the place. Um and so and

I think you have uh projects like any

kind of development where uh a developer

is developing multiple tracks of

projects. The one that's in the lead

will go forward and the others will be

scrapped. Just meaning that they have to

do permitting, land selection and then

they have to find an interconnect. Let's

just say a developer has 10 different

data centers. In the end it might not be

10 data centers. Uh there might be only

two. So there is some double counting

going on. I believe that's my view on

it. Uh now I do think that things are

pushing ahead. Now the only real

gigawatt scale data center that's been

built is by SpaceX. Um uh there there's

others that will claim that that there's

been kind of add-ons to get you to that

level. Um but we're still in the very

early phases and that just to throw

another complexity to it. The industry

is moving to this 800vt architecture

with the new Nvidia chips which

basically requires more power more

power.

>> It requires more of a grid equipment

like from a GEV.

>> What what do you mean more of a grid

equipment?

>> So the different type of power

electronics to to change the voltage of

power that goes into the data center

both on the outside and the inside. Most

power is produced at AC like so we hear

ACDC and then the direct current is what

the data center runs off of. So somebody

has to convert something has to convert

it.

>> Yeah. Or like Bloom Energy produces 800

volt DC power naturally. But you have a

lot of power electronics. But that's an

even earlier phases. So now there's also

this another potential uh pause in

development as those new chips come to

market because if I'm just like a early

days now planning a data center, do I do

I rush ahead with the old Nvidia chips

or do I wait till the new ones come on?

And so there are it's going to be very

lumpy. I mean, and if you think about

>> So the development is going to be lumpy

under the best of circumstances.

>> Under the best of circumstances.

>> That's interesting. All right. So let's

let's talk about some companies because

cuz some of the companies you cover are

very interesting. Um let's start with um

what I'll admit is my favorite company

that you that you cover because I own

it. Okay.

>> Which is GE Vernova. So for those of you

who don't know, Genova used to be part

of GE. While it was part of GE, it was

going through terrible times. I remember

people put out research notes where they

would do like the breakup value of GE

and GE VOVA had negative value and today

it's over 100 bill 100 billion I lose

track 150 billion so the stock's done

incredibly well

>> just give us a you have a buy

recommendation on it just give us a

little background like what why is GEV

such an interesting company in this time

frame and then I also would like ask

because I don't actually don't know talk

about their nuclear stuff

>> yeah uh so uh they operate on three

segments two get the most attention one

really has got the most attention uh uh

uh previously and it's changing now but

the power segment gets the most

attention. Uh they primarily sell

natural gas turbines

>> which are huge

>> which are huge. We're talking multiple

hundreds of megawatts. Um and they're

>> I don't think people understand like

like a gas turbine

it's massive. I mean it's [laughter]

really massive.

>> Yeah. And so that accounts for you know

90% of that of the the equipment sales

in that uh in that part of the business

right they also sell they buy GE uh

aerospace

uh turbines

>> for planes

>> well they buy uh to power the grid too

and so now they retrofit there's

companies yes there's companies doing

this like FTI Aviation is talking about

taking their old engines and uh putting

them onto the grid.

>> Wow. Um, and so that's

>> by the way, just just so everybody

knows,

>> a jet engine,

>> Yeah.

>> looks just like a gas turbine. It's just

that the gas tour is a lot bigger.

>> Yeah. And and it it I I use that to

point out that they're do repurposing

jet engines for the grid because it

shows you how the time to power is such

a big need. So being able to hook up

fast for data centers because they're in

what I consider an arms race, the data

centers to build out and they don't want

to wait around. Uh this is why you know

Bloom, we talk about Bloom too, but

that's why they've been able to enter

the market too because they can get

product out there quickly and then they

service these uh these power turbines.

The thing about that segment that's so

interesting is that they've been able to

book out until 2030 uh with price. So

they're be able to GEV. They've been

raising

>> it's that long tail the business. So in

other words,

>> something that's booked today

>> is not actually going to get into

utility plan till 2030.

>> Yeah. till 2031 though. Right. Yeah.

>> That's how that's how long tailed this

is.

>> Yes.

>> Uh the other uh segment.

>> So basically you're saying you don't

build this stuff like Tidly Winks.

>> No. No, you don't build like Tilly Winks

and you know the permitting phase. Uh

and that's a problem too from

environmental permits. At the federal

level, we don't care about uh CO2

anymore, right?

>> But the hyperscalers still do have their

targets on CO2. Uh and they want

flexibility going forward. But the

knocks and socks which are just air

pollutants uh at a city level and a

regional level, state level are very

important. And so that can take six

months to get those air permits uh for

that. And the other big segment is

electrification.

>> And what is that

>> that is selling high voltage equipment.

So think about big transformers, things

to hook up to the grid. um you know, as

either the uh

>> kind of like the nuts and bolts,

>> the nuts and bolts of this grid. And

whether you're building out transmission

lines or hooking up new uh load pieces

[clears throat] like a whether it's a a

manufacturing plant or it's a data

center, um you need this equipment uh

transformers. Uh the one thing that

they're doing is as they sell more into

data centers, they're cross-selling that

equipment into the data center. So right

now,

>> so they sell the turbine with the with

the transformer

>> with the transformer.

>> I I saw they had a deal with Chevron

where they did that. That was last week

>> and that I read your note increas

increases their uh their content there.

Uh and so those are the and they're also

getting priced in that business

>> and they have wind but nobody cares

about no cares about wind sucks.

>> The way I look at it is like the wind is

like a a call option. Uh there's they're

doing some self-help on that business.

They have these offshore wind projects

they won't do again. S work off. Yeah.

Whatever.

>> Let's talk about nuclear. Explain. I

that's one part of the business that I

actually don't know. What what is their

nuclear business? So the uh they're

partnered with Hitachi uh and this is uh

you know this is a an old partnership uh

where they are uh create they've created

their own uh small modular reactors. You

get there's a lot of attention around

small modular reactors. Uh there are

companies like Oakllo new scale that

went public via spa and other ways that

are that are focused on developing SMRs.

>> What's SMRs?

>> Small modular reactor.

>> So what does that mean? I've heard this.

What is a small modular reactor?

>> Sure. Um, it's not as small as you think

it is.

>> Yeah. I was wondering, [laughter] in

other words, it's bigger than this room.

>> Yeah. Yeah. Definitely bigger than this

room. Uh, it's not quite as big as, you

know, like three mile line where you're

talking multiple gigawatts in many

cases. Uh, these tend to be 300 400

megawatts, 250 megawatt. So, smaller

size. Okay.

>> But the the supply chain for one,

>> it's a new product. So, the like the

supply chain has to be built. Yeah. This

is new. Okay.

>> Uh so, you know, financing is an issue.

Uh the the pro projects you really need

to have the same one like seven of them

before you can start really uh financing

them through, you know, traditional

methods.

>> So, what what would someone buy a small

modular reactor for?

>> So,

>> I mean, cuz I'm not hooking it up to my

own home.

>> No. Uh you would hook it up to a data

center. Um

>> so, it would power a data center. It

would power a data center or a small

city.

>> Yeah. And so, uh, GEV, they're building

their first one, uh, in Ontario.

Ontario. Yeah. In Ontario. And, uh, they

have the plans to build several other

ones there. Uh, they have plans in

Europe. Uh, Tennessee Valley Authority.

>> I hear Germany may go back to nuclear

after they got rid of it.

>> Yeah. Yeah.

>> Just in time for the Ukraine war.

>> Yeah. Yeah. Exactly. When you have the

pinch on natural gas like they do, I

think that they're moving in that

direction. Uh but then also like in

different parts of the United States and

Tennessee Valley Authority in the

southeast uh they're they're going to

build out something. This is part of uh

the Japanese investment in the US. Uh

and I think if anyone can do this and

there's lots of skepticism. I would say

I'm more skeptical on the timeline of

some of these companies and that have

very aggressive timelines around like

2035 and having you know dozens of these

these uh uh these plants out there. Uh I

think GEV, you know, is is targeting,

you know, late 2030s to bring on, you

know, uh uh uh enough where it moves the

needle.

>> Late 2030s.

>> Yeah. The first one will come on by

2035,

>> but it's still going to be too soon.

2035 is the first one.

>> God knows where we'll all be in 205.

>> Exactly. Exactly. But you know what? One

good thing about that, I had an investor

that was a client that was short GV in

the last uh uh earnings print, and he

asked me a very good question. than what

I thought peak earnings for GV would be

and because they have this service tail

in the business you could stretch it to

mid next decade I think in my opinion

before you see peak earnings uh so I

think there's a long runway for for the

stock there

>> let's switch to you cover Tesla you

cover Rivian you cover what was it Lucid

>> so call it electronic vehicles before we

even get into any of the company

specific stuff like just tell me what's

going on in electronic vehicles

I have no position in this group. Okay.

But one of the things that I I find

puzzling I I always joke with someone

about Tesla.

>> Like imagine it's 2022 and you work at a

hedge fund and you're an analyst and you

go to your boss and you say, "We got to

short Tesla." And the boss says, "What

are you crazy?" And you say, "No, no,

I'm not crazy. I here's my model." And

my model says that in the next over the

next four years, Tesla's earnings will

go straight down every single year so

that by the time you get to the end of

2025, the earnings will be less than

half. And the portfolio manager says,

"Well, that's a pretty compelling

thesis. Let's short it."

And it happened exactly [laughter] as

you as this guy predicts, and you didn't

make any money,

>> right?

>> Okay. So, what's happening? Let's talk

just pure fundamentals. What is

happening? Forget about the the robots

and forget about for the moment um

self-driving cars, just the electronic

vehicle business that Lucid's in, that

Rivian's in, that Tesla's in. What's

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>> So, EV business um right now, uh EV

sales US still growing. Uh single-digit

numbers here in the US. Uh Tesla's

business in the US uh a flattish at

best.

>> Flattish.

>> Yeah. In the US.

>> Yeah. This will be a down year most

likely uh in in their EV business. Um uh

or a flat year overall. Um there's

strength that this quarter was strong

should be strong in uh uh across uh all

regions. Um but the big things there I

think there's still growth in overall

electric vehicle sales. Uh Europe, I

would say China is the strongest, then

Europe, and then the US.

>> Can you talk a little bit about I mean

the China competition, I mean is real.

They make decent cars and they make them

for a lot less. So how are these

companies going to compete outside the

US?

>> It's very difficult. Tesla uh has been

competing in that market and that's why

it's hard to compete with Tesla in the

US market because they they make good

cars at relatively affordable prices. Uh

the Chinese though uh you know I was

just in Europe for two weeks and almost

every major city has at least two BYD

showrooms in Europe and you actually

every city.

>> Yeah. And you actually see the cars out

there.

>> BYD is the biggest electronic vehicle

company in China.

>> Yeah, it is. Uh but then there's also

like Neos I saw Neos in Germany. the

German uh market is is is very at risk

because you see these cab like half cab

fleets are Chinese electric vehicles

really uh are moving in that direction.

>> You know it's incredible what the

destruction that has happened in the

German car market. Yeah. I mean the

German autos just they they let the

electronic vehicle business get

completely away from them.

>> And you know if I went back and I I go I

go to Europe probably twice a year to

visit clients. Um, and if I go back, you

know, just three years, four years maybe

at the most ago, and you talk to a

client like about this, they would say,

"No one here will buy uh Chinese cars."

Uh, but it started off very slowly

chipping away and now, you know, market

share is picking up and I think it will

continue to accelerate and we'll see

that in other regions as well. Uh, you

know, whether it's Canada or elsewhere.

>> Just talk to me about Tesla for a little

bit. Um, we're going to talk about

whether you think SpaceX's going to buy

them, but that's let's that's that's

we'll push that aside just for a second.

You're recommending it.

>> Why are you recommending?

>> Sure. I think uh at the core uh it's one

of the most innovative uh companies in

in our country um in the world and at

the foundation of that uh their ability

to hire from the best the best best

engineers out there. uh it's often

ranked, you know, uh top one of two

places go work from the major

engineering schools and the other place

is SpaceX.

>> Would you agree with the statement

>> that if the only business that Tesla had

was the electronic vehicle business,

>> the stock's way overvalued?

>> Yes.

>> Okay. So, that that you concur?

>> Yes.

>> Okay. So, let's talk about um

self-driving cars and robots. Like I

mean Elon makes promises about

self-driving cars the last several years

that he hasn't even come close to

fulfilling. So what gives you confidence

that that this is going to work?

>> Sure. Uh and then because that's the

only reason let's circle circle back to

the energy portion of the business too

because that's important. Um

>> yes I think for the last almost 10 years

he said next year this next year next

year next year next year and so it's

taken longer. Um I think that uh what

we'll see from here is that uh the uh it

will accelerate and that mean uh the

number of cars in the road uh for the

robo taxi will accelerate. Um and

specifically in Texas we'll see that

happen first. uh in the Austin region,

uh Houston, Dallas. Um they're fully

permitted there with the uh the roll out

of the robo taxi with the the cyber cab,

which is the purpose-built vehicle, the

two-seater gold car. Um uh that that

will help. It's purpose-built, you know,

no steering wheel, no brakes now under

the new federal rules, they don't have

to have that. um and then we'll see it

accelerate into other regions. Whereas

in uh if you're in California or in

Phoenix right now and San Francisco

specifically, it seems like every fifth

car is a Whimo. Uh and then you have

Zuks there as well, which Zuks is an

Amazonbacked company uh that's also

doing um uh driver out services and it's

going to be a competitive market. It's

not going to be a winner take all

market. Um, but I think that we're going

to see a handful of players, call it

five, uh, in the market. But Tesla

having a vision only, so only using

cameras, not LAR or radar. Uh, it I

think it can scale more quickly once

they

>> Why why people have criticized it? Y

>> because they said it's not adequate

technology. But you Why do you think it

could scale more easily?

>> Yeah. with uh there's less of the

groundwork that needs to be done because

they're constantly pulling all of the

data from all their vehicle fleet

because they own the manufacturing uh

part of the value chain. They can uh uh

the feedback loop is quicker for them to

make changes to the vehicle and like

they don't need to do all like you'll

see now in New York Whimo has you know

they're testing the area they're mapping

the area that is done by the current

vehicle fleet of Tesla on the road right

now. ice

>> and it's feeding back into full uh full

machine learning.

>> So in other words, because of of people

who actually own a Tesla just driving

around New York, whatever they're doing,

that feeds back.

>> All that data, whether or not they have

they bought full self-driving, uh that

data goes back to Tesla.

>> I see. Okay. You wanted to talk about

energy, what Tesla's doing in energy.

>> Uh sure. Uh this this is it's important

now because it's uh 20% of their

operating income comes from the energy

business and it's

>> describe the energy business. I don't

have most people don't even know that

they have anything.

>> Yeah. So they bought Solar City. Uh now

I cover Solar City too and uh that was

somewhat of a a bailout. Yes.

>> Not [laughter]

that those nice to bail out your

cousins.

>> Yeah. Yeah. Exactly. and all of your you

have crossboard members all over the

place. Yes. No kidding. But we can talk

about this what with uh with SpaceX too

and and uh how it's similar and

dissimilar too. That business is

primarily uh what they call mega packs.

Um and these are big batteries for the

grid. Okay.

>> Whether it's coupled with renewables

like solar or now more and more they're

being put you know standalone to balance

the grid uh in periods of fluctuation.

Uh and this is a global business. They

have three plants one in California.

They're building one in Texas and they

have one in Shanghai uh to service China

and other parts of the world. Uh this

business is growing um you know uh uh

over 30% a year on the top line. Uh has

you know pretty stable healthy margins

uh and is contributing you know uh

really a meaningful portion of the cash

flow that is going to be reinvested into

some of the future stuff like robo taxi

and optimus robots. Um, so I just I

consider this the auto business and that

business as kind of the core here and

now business.

>> So let's talk about look, SpaceX just

went public. Um, I mean I'm public about

this. I think the valuation is insane.

Um, you put out a piece arguing that you

thought SpaceX was going to buy Tesla. I

read your piece.

>> Yeah. I my response to that and I'll be

curious is what you think is we live in

in an era where of deconglomeization

if if that's a word. Yeah. And I mean,

SpaceX already is complicated enough and

that it's got space, it's got um the

satellite business, and it's and it's

got AI. And now you're going to add on,

if this were to happen, electronic

vehicles, the energy business,

autonomous driving, robots. That'd be

seven businesses for one company.

>> Yeah.

>> That's awfully complicated. Yeah.

>> So, why do you think it's a good idea?

>> So, I'll start with with Elon. Uh I

think because it's it's an important

piece. I don't think it's the only

piece, but he's argued that he needs to

have 25% ownership of Tesla. Um because

he doesn't want uh anyone else control

the AI. He wants to have uh that much

control of the company. Um this is a

backdoor way for him to do it because of

the mix of his ownership at SpaceX.

>> So what's I what is his objection to not

owning 25% of Tesla?

>> He doesn't feel comfortable developing

AI where he doesn't have

>> But he's developing AI in SpaceX. Yeah.

Where where he could be thrown out

though where he does have enough uh

ownership of the business. Okay. Is what

he said in the past. So I think that's

one way for him to back door to that

percentage. Two like with the Google uh

equity offering um capital is a big part

of this whole equation for this uh this

arms race of data centers. I think

having the companies together makes that

easier for him to raise type of capital

to keep up with the Joneses of uh of the

other uh big seven or seven. He started

priming the market with doing these uh

it's not structured as a joint venture

but they're projects with the two

companies. Uh number one he's going to

build a solar uh model uh module or

solar panel manufacturing facility of

100 gawatts. That's a massive

>> and that would be for whom?

>> That is a partnership between SpaceX and

Tesla. He also

>> And that would be for what? What for

what purpose?

>> Oh uh for utility scale solar and

residential solar

>> to sell it.

>> To sell it. Yeah.

>> So, in other words, like like becoming a

first solar.

>> Yeah. By becoming a first solar.

>> Okay. Which we'll talk about.

>> We'll talk about and it's um 100 gawatts

is is like that's China scale. Um it's

huge. If he gets a fifth of the way

there, that's bigger than first solar,

right?

>> Um they also have this terra fab. So,

building chips uh you know, whether it's

for the self-driving vehicles uh or it's

something to compete with Nvidia um that

they're a joint partner in. And on his

last call, he said something to the

effect of, "I'm tired of going to each

board and having to get this stuff

approved when we do a joint product

project with each other."

>> So, this is one board.

>> Yeah. Uh, so it make it one board. Um,

and I think just overall speed of making

decisions. Uh, it makes sense from that

as well.

>> So, you think this is going to happen?

>> I do think it's going to happen.

>> When do you think it'll happen?

>> I think that the way things are moving

right now, speed is is very important.

Uh, I said 18 18 months, but I think it

could be this year event.

>> You know, the problem is if you if you

um let's say the deal got announced in a

year.

>> Yeah.

>> Then it's another year. Yes. Before it's

actually done.

>> Yeah. I think that's two years. I think

that's even more reason to do it sooner

than later. There's nothing with the

fact that it just IPOed that would stop

them from doing it at this point. Um I

if I could make one point about SpaceX

because I think it's

>> when we talk about energy being the

bottleneck to to data centers or or a

key element to data centers. Uh one

thing I emphasize just because a lot of

people laugh off his you know making

data centers in space and saying like

there's not the equipment the technology

here already. I use it just as an

example to show how important it is uh

how energy is because that's really the

driver there. Uh is that like energy is

not scarce there. You'll get solar

energy up you'll have to use cooling uh

for the data center as well. Uh but

that's just an extreme example to show

you how important it Yeah. Yeah.

[laughter] How how important energy is.

Yeah. I I had a uh when this is a point

of humor, the um when I read the S1,

there was a whole section about um

things that SpaceX could do.

>> Yeah.

>> Which was quite a list. And one

>> mining asteroids,

>> right? That's what I'm bringing up. It's

mining asteroids. And and I said, you

know, because I'm a real science sci-fi

buff. Yeah. I said, you know, mining

asteroids is actually a major theme on

this Apple sci-fi show called For All

Mankind. So maybe Elon's writes for the

show. [laughter]

>> Uh no it it's interesting because

there's a whole element too like if you

think about the merger of the two is

like Optimus would be very important in

you know space exploration going in

environments like that. Yeah.

>> And those versus saying if you want to

mine you can still mine on planet Earth.

>> Yeah. Just real quickly on on the on the

mining asteroid points we cover MP

materials uh which is rare earth. They

own the largest mine in the US. Uh and

then they're making a magnet facility.

The first one is sold out to GM and to

uh Apple. Uh they're building another

facility um that's uh two and a half

times as big. U but that will be those

magnets will be even more important

because they go into any kind of motors.

So like as these centers get built out

uh like fans uh in HVAC, they all have

uh magnets in there and China controls

naive% [clears throat] of all the 9% and

the magnets it gets even higher than

that.

>> Got it. Let's finish up with solar, a

group I've covered for a long time. Now,

you don't cover residential solar

companies.

>> No. Uh, thank God I did it long enough

that in several different iterations

disaster.

>> It's very tough. It's a tough It's a

tough fundamental business in the cell.

Uh, like you know, this is doortodoor

sales.

>> You're putting little panels on people's

roofs and you're selling it house to

house.

>> House to house. Uh, and so you have

customer acquisition costs are $10,000.

>> Yeah. Yeah.

And so that that's tough I and I've

always been I always thought that you

know utility scale solar makes more

sense just from a scale perspective from

a cost perspective.

>> Okay. But you're not so the two

companies that you cover that are pure

plays here are first solar.

>> Yes.

>> And array

>> in next power. Uh next power. That's

like an array uh comp that's

into other.

>> So you're not recommending any of them.

>> I'm recommending next power. Next power.

Let's leave aside next power for a

second and let's just talk about first

solar because because array makes the

devices that turn the solar panels so

that you're constantly in the sun but

first solar actually makes the solar

panels for the utility and you're not

recommending it

>> and and yet if I knew nothing

>> I I' I'd say the grid's growing like

crazy.

>> We need power from every every possible

source. First Solar is the biggest

producer of solar panels in the United

States. We need them. Why aren't you

recommending it? Sure. Obvious question.

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>> Sure. uh short-term uh they are uh they

are moving capacity from Malaysia,

Vietnam uh to finish it in the United

States and there's still a lot and so

there's there's execution risk with

that. Um I'd say that's small piece of

it. Uh there's also uh they're in a

period right now where there's still

regulatory issues uh being decided. Uh

specifically uh uh the section 232

tariffs around imported uh polysilicon

or panels that use polysilicon. This is

all, you know, policy with China, trade

war. Uh, until that gets settled, they

can't book business uh because they

don't know what to charge their

customers and their customers don't know

what to pay for it.

>> So, in other words, the panels that they

they make mostly everything in Malaysia.

>> They have three factories also in the

United States.

>> In the United States, but some of it's

outside the United States.

>> Some of it they have a factory.

>> So, they can't tell you what they could

charge for the stuff that's outside the

United States. Uh well, they're waiting

to see how much more of a premium they

can get because of the tariffs that are

coming from China, but those haven't

been decided yet.

>> Okay. And is there any timeline?

>> We're supposed to hear by July 4th. I

mean, we were supposed to hear by

January, too. So, some of this stuff is

slipping. Uh the stock will trade with

you know, easing or tense uh or more

tense uh uh you know, trade with uh war

with China. And so,

>> so what do what do the people who own

the stock want? So they want uh specific

not a percentage uh like a specific

penny tariff on the on the panels

because if you put a percentage on the

on the panels from China, they just

lower the price and the percentage is

smaller, right? And so it's a kind of a

way around the uh around the tariff. So

they want stricter tariffs um and uh

just visibility on the tariffs.

>> So if there was where is first solar now

the stock

>> price 250s

>> it's been hanging here for a while. So,

if the tariff situation went the way the

company wants,

>> Yes.

>> how much upside do you think there?

>> I think there's$1 $100 upside on it.

>> $100 off off of 250.

>> There's a lot of leverage. Every penny

ASP is $2 in earnings about. Let's just

make up numbers. They do $12 in earnings

this year. But like, so if they

>> So, so the stock's 250 and they're going

to do like $12 in earnings. Yeah. But

next year they could do what? If if

everything came out right?

>> If everything came out right that it

could do as as high as 1718. Okay, got

it. Back to electronic vehicles.

>> Yeah,

>> Lucid, Riven, they kind of make very

high-end

>> cars.

Like, is there a story here or not

really?

>> I think Rivian more so than Lucid. Uh,

Lucid uh, you know, has um, uh, backing

of the Saudi investors there. Lucid

does.

>> Yeah, Lucid does. That's kept them

afloat. There's there's a new CEO there.

I think if anything, they become more of

a technology provider. They do have good

underlying technology that just hasn't

been scaled. So like they do have they

had a partnership with Aston Martin. Uh

but this new CEO is coming in kind of

doing a restart of the business right

now. I'm more confident in Riven's brand

and being the [clears throat] you know

the first follower of Tesla in the

United States. Uh they're moving

>> they make a nice looking car

>> and they're moving to their next

generation vehicle which will get down

to you know uh kind of 40 $45,000 range.

The the initial vehicles are more

expensive than that. It's called the R2.

It's a smaller SUV. Uh I drove it um

three weeks ago at the their launch

event. It was awesome. It was great. Uh

it it looks I think it looks better

personally than the Model Y. Uh I think

there's a satur saturation uh uh issue

with the Model Y where

>> what's the Model Y?

>> The Model Y, the Tesla Model Y, the

crossover uh the small one. But like if

you go in, you know, most part a lot of

parts of New York, that's all you see

are the same vehicles are definitely out

in California. And so, you know, people

want to have a choice and and this is

going to be like the first compelling

choice to the Model Y um out there.

Okay. Got it.

>> What have I what haven't I asked you?

>> Um lots of good questions there. Um I

think you know one of the worries about

the power side is just like over

capacity because a lot of these

companies are ramping up more capacity

and as a solar analyst that you know

it's like dog years covering solar

[laughter] of the up and downs that uh

you know

The solar group is hard to be a bull

group is is an insane group.

>> It's hard to be a bull because like

you've seen the story before times get

good they end very quickly and and

badly.

>> Um I think that the runway though for

energy uh you know the visibility here

we got a decade of it. You know, I I

believe the you know, the CEO of uh of

GEV, Scott, uh talks about it being a

super cycle that and that they expect to

be sold out to 2035 at least, right?

>> And I wasn't there uh you know, starting

in this year and like the more you know

we've done done our work and you know

talked to developers uh we have a lot of

visibility here for uh for the next

decade. Now, labor is going to be an

area which is going to become more and

more of a bottleneck out there. Uh

whether it's for data centers or just

energy overall

>> to get the labor.

>> Yeah. Electricians. Uh everything.

>> Yeah. Everything.

>> Okay. All right.

>> I heard because I've never owned an

electronic vehicle that the that the

value of electronic vehicles collapses

after a few years. Is that true? And if

if it's true, why?

>> You know, it depends on what car. Uh

Teslas have actually held up better than

most. Um, one of the things I think that

it will impact used car the used car

market is just the rate of innovation

overall and it because companies like

Tesla and Rivian they don't necessarily

have model years per se like for example

if they need a new the steering wheel

needs has a new vendor they'll just rip

it out of that model and the next one on

the line and put the new steering wheel

in where traditional auto will wait till

the following year and so they make

constant changes to it which makes them

obsolete

>> quicker more quickly even though they

can actually upgrade the vehicles via

overtheair updates versus not not many

auto manufacturers can do it to the same

level. Um but I think it's just a rate

of innovation right now. Like personally

I would like I would rather lease a car

now even though people say never lease a

car than to buy a car just because of

that residual value across that's EVs to

uh

>> what I heard that the battery starts to

lose efficacy and and that since the

most of the value of the car is in the

battery that that's that hurts.

>> It depends where you are. If you're in

cold environments if we're in

Minneapolis that it's more of an impact

on it. uh for Canada uh you know uh um

uh but you know they have uh warranties

around their batteries and a lot you

know a lot of that's are corner cases um

you know of this rapid uh degradation in

batteries

>> Ben thank you

>> thank you for having me on it was really

great

>> thank you

>> and we're back a lot of information in

that interview first of all the United

States is building something on the

order of 30 megawws of power per year

which

I mean is the equivalent of a couple of

cities is how much power we're talking

about here. And it's not all data center

related but a lot of it is data center

related. So we started with that and

then we went on to uh GE Vernova where

we talked about how GE makes gas

turbines that are crucial in in terms of

utilities providing power to data

centers. You know, gas turbines are

massive and they require years to make.

And so when they get an order, when they

report an order like this quarter, when

they'll report an order, that turbine is

not going to actually be built and then

put into a utility until 2030, 2031.

That's how long tailed this business is.

And GEV has visibility on that business

for well into the 2030s. Uh it also has

an electrification business which is

related and it has a nuclear business

which is not going to be an important

part of earnings till at least 2035 but

it could become a big part of the

company. And then we moved on to Tesla

where Ben is positive because he thinks

that the autonomous vehicle business is

going to do well. We'll see. Elon's been

promising that for 10 years. Count me a

skeptic. But Ben also thinks that um

SpaceX is going to buy Tesla and if he

was a betting man, he thinks it will

happen relatively soon because Elon

wants to have total control. We also

spoke about some solar companies, none

of which he's all that positive on

because of tariffs. And we just finished

up talking about how one of the biggest

constraints is going to be labor because

there's such demand for all of these

plants and construction that there is an

enormous demand for labor and it's going

to be interesting to see if the the

United States can supply sufficient

labor to build all the things that need

to be built. Hope you enjoyed that

episode. I certainly enjoyed doing it

and see you soon.

>> [music]

>> This podcast is forformational purposes

only and does not constitute investment

advice. A host and guests may hold

positions [music] and stocks discussed.

Opinions expressed are their own and not

recommendations. Please do your own due

diligence and consult a licensed

financial adviser before [music] making

any investment decisions.